The manufacturer of graphics-processor technologies for workstations, Nvidia Corporation on Thursday announced that it has filed a countersuit against Intel Corporation for breach of contract. Nvidia reported that it has filed the countersuit in the Court of Chancery in the State of Delaware, seeking to terminate Intel's license to its valuable patent portfolio.

The countersuit by Nvidia came after Intel filed a lawsuit against Nvidia, last month in the Delaware court, in which Intel alleged that the four-year-old chipset license agreement does not apply to its next generation CPUs with "integrated" memory controllers, such as its Nehalem processor, the chips that Apple is now using in the new Mac Pro. It prevents Nvidia from developing a compatible chipset that Apple could use in Macs based on the new processor.

Nvidia's president and CEO, Jen-Hsun Huang said, "Nvidia did not initiate this legal dispute, but we must defend ourselves and the rights we negotiated for when we provided Intel access to our valuable patents. Intel's actions are intended to block us from making use of the very license rights that they agreed to provide."

In its countersuit, Nvidia maintained that "Intel has manufactured this licensing dispute as part of a calculated strategy to eliminate Nvidia as a competitive threat." In its complaint, Nvidia said, "For years,"Intel has dominated the lucrative field of central processing units, with Intel's graphics offering being an afterthought. Nvidia, in contrast, correctly predicted that graphics processing would become increasingly important to computer technology and pioneered sophisticated graphics products, including innovative new graphics processing units."

Nvidia stated that "after years of dominating the computer processing space, Intel found it self needing to play catch-up to Nvidia's pioneering graphics processing technology," which resulted in Intel licensing Nvidia's "entire patent portfolio" in 2004, in exchange for granting Nvidia "a broad, long-term license to make chipsets for Intel's CPUs."

"Unable to compete on the merits, Intel is now using this lawsuit to tilt the playing field decidedly in its favor," Nvidia said. In its complaint, Nvidia is seeking get Intel's rights to its (Nvidia's) patent portfolio under the cross license "terminated in their entirety," depriving Intel of using Nvidia's graphics technology as long as it blocks Nvidia's ability to build licensed versions of chipsets compatible with Intel's latest CPUs.

Last year, Apple switched from using Intel's support chipsets to Nvidia in the unibody MacBooks. The disputed agreement between the two Santa Clara, California based companies - Nvidia and Intel, to bring platform innovations to Intel CPU-based systems, took place in 2004, and reciprocally, Intel took a license to Nvidia's rich portfolio of
3D, GPU, and other computing patents. For more than a year, Nvidia had been trying to settle its dispute with Intel in a fair and reasonable manner.